Category Archives: Mutual Fund Commentary

January 1, 2018

By David Snowball

Dear friends,

Welcome to the New Year!

And to an odd question: why is it a New Year? That is, why January 1? Most calendrical events correspond to something: cycles of the moon and stars, movement of the seasons, conclusions of wars or deaths of Great Men.

But why January 1? It corresponds with nothing.

The short version of the answer is Continue reading →

Rolling toward the one fund you can trust

By David Snowball

The knock on mutual fund performance numbers is that they’re static and arbitrary snapshots that give the illusion of being meaningful. What do you learn from looking at a fund’s five-year performance number? Mostly, you learn that the fund, through skill or luck, did well in the market conditions that obtained between December 2012 and December 2017. Sadly, we don’t have any reason to think those two dates are particularly important (why December 2012? ‘cause it was five years ago, duh!) and we don’t have any Continue reading →

Shukran jazīlan! Trugarez! Xièxie! Go raibh maith agaibh! E molte grazie!

By David Snowball

Likewise merci, danke and, more than all, thanks!

On December 17th, I wrote a note to the 7,000 or so folks on our mailing list. The sad part of the note was reminding folks of the end of our associate’s relationship with Amazon which had so long provided our ability to cover our “hard” bills such as webhosting and email. The glad part was announcing a challenge gift of $2000, offered by three MFO readers who wanted to do the best they could to support us. Their offer was straightforward: we’ll put in a dollar of our own money for every Continue reading →

Briefly Noted

By David Snowball


In December’s story, “There’s no idea so dumb that it won’t attract a dozen ETFs,” I derided the notion of blockchain ETFs. That’s because they have so few meaningful investments; there just aren’t many publicly traded blockchain-focused firms to build a portfolio around. I described their investment universe as “a small, motley collection of firms that recently changed their names to blockchainify them (360 Capital Financial suddenly became 360 Blockchain), over-the-counter stocks, foreign small caps and recent IPOs.”

Shortly thereafter, Long Island Iced Tea Corporation – literally, guys who make Continue reading →

December 1, 2017

By David Snowball

Dear friends,

Welcome to Winter. It’s my favorite time of the year. My students, with their hummingbird-like metabolisms, are loath to surrender their shorts and sandals even now.

The midwinter holidays ahead – not just Christmas but a dozen other celebrations rooted in other cultures and other traditions – are, at base, expressions of gratitude. They occur in the darkest, coldest, most threatening time of year. They occur at the moment when we most need others, and they most need us. No one thrives when they’re alone and each day brings 14 to 18 hours of darkness. And so we’ve chosen, from time immemorial, to open our Continue reading →

The Terrific Twos

By David Snowball

We thought we’d start catching up with the 130 U.S. equity funds which have passed their second anniversary but have not yet reached their third, which is when conventional trackers such as Morningstar and Lipper pick them up. As Charles has repeatedly demonstrated, the screener at MFO Premium allows you to answer odd and interesting questions. As I, and other users of the site, have asked him, “would it be possible to …?” Charles has almost always responded with a cheerful “let me see what I can do. I’ll get back to you.”

Two days later, the screener has Continue reading →

Launch Alert: The Touchstone adoptees

By David Snowball

On October 30, 2017, Touchstone Investments finalized the adoption of a suite of Sentinel funds. The Sentinel funds were somewhere between “solid” and “outstanding,” depending on the fund in question, but they were not at all well known. Given the maturity of the mutual fund marketplace, Sentinel saw little prospect for growth and little reason to continue serving as adviser to the funds. Like a number of other firms, including UMB which recently sold the Scout Funds, Sentinel looked to sell the funds after (80) years in the business. Touchstone Investments stepped up.

Nine Sentinel funds were involved in Continue reading →

There’s no idea so dumb that it won’t attract a dozen ETFs

By David Snowball

I’m not sure that Bitcoins actually exist. I’ve never seen one, and I’ve never interacted with one. I can’t quite explain what they are, beyond invoking the term “cryptocurrency” (which leads me to wonder if its ghoulish story will eventually be popularized under the title, “Tales from the Crypto …”?). Our colleague Sam Lee is intrigued by the potential for the underlying software, though skeptical of Bitcoin per se.

Not quite as skeptical as Hamilton Nolan seems to be. Mr. Nolan, whose writing style occasionally makes Continue reading →

Briefly Noted

By David Snowball


It’s been a good first year for Laura Geritz, the folks at the Rondure funds and her partners at Grandeur Peak. Rondure New World (RNWOX) has drawn $90 million in assets since its May 1, 2017 launch. Rondure Overseas (ROSOX) has drawn just $15 million so far, despite having stronger absolute and relative returns than its sibling. New World is an unconstrained all-cap fund investing in firms that are either in or are substantially tied to, the emerging markets. Overseas has a much lower market cap reflecting, in part, New World’s investments in huge multinational corporations that have substantial interests in the emerging world. Both funds have about 8% cash and portfolios that are reassuringly out-of-step with their peers; that is, both Continue reading →

The Real Problem with Morningstar’s Star Rating

By Samuel Lee

Last week the Wall Street Journal published a story slamming Morningstar (“The Morningstar Mirage”), arguing the firm’s star ratings were virtually useless as predictors of performance. The Journal showed that both five-star funds and one-star funds regressed toward the mean over time. But it overstated its case because the funds didn’t regress all the way: five-star funds ended up doing much better than one star funds three, five and even ten years on. The pattern is striking: higher stars predicted higher future star ratings over all the Continue reading →

Launch Alert: Northern Funds U.S. Quality ESG Fund (NUESX)

By David Snowball

On October 02, 2017, Northern Trust Asset Management launched Northern U.S. Quality ESG Fund.  It strikes me as a particularly interesting fund which combines two separately valuable commitments in a single low-cost platform.

The case for investing in high quality companies is almost definitional. No sensible person buys low quality anything when, for about the same price, they can get a high quality alternative. The key is having a viable definition of “quality” and a clear sense of how much of a premium a quality company might charge. Northern has done a Continue reading →

Launch Alert: American Beacon Shapiro Equity Opportunities Fund (SHXPX) and American Beacon Shapiro SMID Cap Equity Fund (SHDPX) Investor Class

By Dennis Baran

On September 12, 2017, American Beacon launched two funds using Shapiro Capital Management, an institutional, value-oriented firm, as its sub-advisor. This alert focuses on the Equity Opportunities Fund, its all-cap value product. The SMID fund applies the same strategy in the mid cap space.

Established in 1990, Shapiro is known for deep fundamental research and concentrated portfolios. As of 2017, its managers — Samuel Shapiro, Michael McCarthy, Louis Shapiro, and Harry Shapiro — have 141 years of collective investment experience and head a team without turnover for 27 years, a continuity that confirms their ability to outperform their peers Continue reading →

Predicting 2017’s Capital Gain Distributions

By Mark Wilson

Warren Buffet once quipped: “Forecasts usually tell us more of the forecaster than of the forecast.”  This is one reason I hesitate to forecast what we might see this year for capital gains distributions from mutual funds.  Nonetheless, I’ll reveal a little about myself and will make an educated guess.

Looking Back

I don’t track absolute dollars of fund distributions, but for the Continue reading →

Fuller & Thaler Behavioral Small-Cap Equity (FTHNX)

By David Snowball

Objective and strategy

FTHNX pursues long-term capital appreciation. The managers invest in a diversified US small cap equity portfolio. The managers seek out stocks where other investors are likely to make behavioral mistakes. If they conclude that an investor mistake is likely and the company has solid fundamentals, the portfolio managers generally buy the stock. They sell when the misbehavior has run its course, which tends to lead to a high turnover portfolio. That said, they do not automatically buy or sell based on a single security’s characteristics; they impose a risk management overlay that helps control exposures to sectors, size, and other characteristics. The fund currently holds Continue reading →

Briefly Noted …

By David Snowball


The $12 million Global Strategic Income Fund (VEEEX) has a couple upgrades planned for the next month. “These changes included the appointment of a new adviser and sub-adviser to the Fund; revisions to the Fund’s investment objective; revisions to the Fund’s investment strategy; a change to the name of the Fund; changes to certain service provider agreements; and the addition of new share classes as well as the conversion of Class C Shares into Class A Shares.” Nominally the current version of the fund had a global, all-asset strategy; practically, it was a global equity fund with a 30-day SEC yield of 0.00%. The new fund will be Continue reading →

October 1, 2017

By David Snowball

Dear friends,

It’s finally fall, my favorite season of the year. The heat abates, the garden quiets, the apples ripen.  Chip and I will soon venture north to Wisconsin for leaf peeking and visits to orchards. You’d be amazed at the variety of flavors found in apples; there are about 200 varieties grown in the US, with the average grocery store stocking just a half dozen (including that flavorless favorite, Red Delicious). You’ve still got time to do better. In the Midwest, anyway, October is the month for Haralson and King David, Golden Russet and Creston, Enterprise and Voyager. Heck, you might find a few Lura Red or Wolf Rivers left, if you’re Continue reading →

The Story without a title

By David Snowball

In journalism, the headlines you read are generally an afterthought, crafted by a headline writer – not the story’s author – to fit the available space and grab attention. For us, story titles function differently: they’re “framing devices,” which we write early and which help us figure out how to explain the entire story.

This is “the story without a title,” because I’ve got Continue reading →